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Many Concerns About Third Avenue

The Focused Credit fund prompts Parent rating downgrade, but other issues are apparent.

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We have downgraded our assessment of Third Avenue Management, the advisor to the Third Avenue family of mutual funds, lowering the firm's Parent rating to Negative from Neutral. (The Parent rating is one of five pillar ratings that Morningstar analysts assign in making an overall assessment of a fund.)

We lowered Third Avenue's Parent rating in the wake of Third Avenue Focused Credit's sudden demise, which we believe reflects a profound management and governance failure. But our concerns about the firm's stewardship practices preceded this event, as we'd previously expressed concern about turnover among Third Avenue's investment staff, persistently weak performance, and redemptions.

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Bridget B. Hughes does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.